The Irish healthcare company Warner Chilcott is to triple in size by paying $3.1bn (£1.9bn) for the prescription medicines arm of Procter & Gamble in a debt-financed deal that has bolstered confidence on Wall Street about banks' willingness to lend money again.

Warner Chilcott, a specialist in women's health, beat off the private equity firm Cerberus to snatch the P&G business, which is best known for the osteoporosis treatment Actonel and a drug for ulcerative colitis, Asacol.

The P&G operation has 2,300 employees but has never gained sufficient scale to be a major part of the huge American company, which is largely focused on over-the-counter healthcare, household products and cleaning, with brands ranging from Crest toothpaste to Gillette razors, Pampers nappies and Pringles snacks. The deal will add annual sales of $2.3bn to Warner Chilcott's present turnover of about $1bn.

Warner Chilcott's chief executive, Roger Boissonneault, described the purchase as a "transformational" event: "The combination will result in Warner Chilcott expanding its domestic reputation and becoming a well-regarded and highly recognised global provider of quality therapeutic products."

He said the deal would give the company access to doctors' surgeries in 14 countries and expand Warner Chilcott from women's healthcare to gastroenterology and urology. "We will acquire a pipeline and improve our existing product development capabilities, plus the talented individuals who have developed the drugs that have improved millions of lives," he said.

Warner Chilcott grew out of Northern Ireland's largest healthcare company, Galen Holdings, in the early part of the decade and produces hormone replacement therapies and birth control products. It is headquartered in Arlee, in the Republic of Ireland, with production facilities in Northern Ireland and Puerto Rico.

The deal is to be financed by a consortium of six banks including JP Morgan, Morgan Stanley, Bank of America and Barclays Capital. It is one of the largest corporate transactions of the summer in a quiet year for takeovers as the credit crunch has left Wall Street banks reluctant to extend significant financing.

Les Funtleyder, an analyst at Miller Tabak & Co, told investors that Warner Chilcott was likely to see a quick boost in its share price: "These type of transactions tend to be positive in the short term for acquiring companies, so [Warner Chilcott] may see an initial pop."

Experts said Warner Chilcott was paying a relatively low price for the P&G operation. David Windley, an analyst at Jefferies & Co, said the deal "helps to diversify and strengthen" the Irish company's portfolio.